Signingoff (2) - SHIP MANAGERS’ PURCHASE ORDERS
The last issue of ‘The Intermediary’ looked at the need for Members to take care that they made their agency status clear when signing off correspondence. The article concentrated on the problems faced by ship agents and ship brokers. In this issue we set out the Club’s recommendations for ship managers signing purchase orders.
ITIC has seen an increase in the number of claims being made by suppliers against ship managers because owners have not settled their bills. The supplier has subsequently pursued the manager on the basis that the purchase order created a contract directly between the supplier and the manager. It is therefore very important that the manager ensures that the purchase order clearly states he is acting as agent for the owner when ordering supplies.
What the manager should not do is state that these supplies are ‘for the account of XYZ Shipmanagement Company’. If you have that form of words on your purchase orders please change them immediately unless you specifically want to order supplies in your own name and so take the credit risk.
Our recommendations are as follows:
1 At the top of the order include the following words:
‘Please invoice this order to: --- (name of owner or bareboat charterer
etc) c/o XYZ
Shipmanagement Company Limited’;
2 when you sign off the purchase order it should be in the following style:
‘for XYZ Shipmanagement Company Limited as agents only for and on behalf of --- (name of owner/bareboat charterer)’.
If you make your agency status clear in this way, you should avoid problems if the ship owner does not pay his bills. Although it will not prevent a supplier trying to sue the ship manager, it will make it very difficult for him to prove that he did not know with whom he was contracting and that he must look to the ship owner and not the ship manager for payment. If Members would like their purchase orders checked by the Club, they should contact the managers.
WARNING ‘Agent’ may not be enough.
In the first part of this article we pointed out that it was important that the words used when signing off made it clear that the person was contracting as an agent. The word ‘agent’ used alone as in ‘Joe Bloggs, agent’ could be descriptive in the same way as ‘Julia Roberts, actress’.
A UK ship agency has consulted the Club about a document they had been asked to complete by their local port authority prior to the arrival of a ship. The form included the words ‘we agree that we will be responsible for all charges.’ At the end of the printed line space was provided for the addition of the name of the party submitting the form together with the words ‘owner/charterer/agent (delete as applicable)’.
The Member was advised that in this context the selection of the word ‘agent’ would not release the ship agent from the obligation to pay the port charges. It was merely descriptive of his business. If the Member was to avoid liability he should alter the printed words to provide ‘as agents only’ followed by the identity of his principal.
If you make your agency status clear, you should avoid problems if the ship owner does not pay his bills. Although it will not prevent a supplier trying to sue the ship manager, it will make it very difficult for him to prove that he did not know with whom he was contracting and that he must look to the ship owner and not the ship manager for payment.